Indonesian Economic System in the 1945 Constitution – One of the objectives of establishing the State of Indonesia is clearly stated in the fourth paragraph of the Preamble to the 1945 Constitution of the Republic of Indonesia, namely to promote general welfare and educate the nation’s life. Therefore, the Indonesian government should manage the economy in accordance with what is regulated in its constitution. The crisis we are experiencing is a momentum for the Indonesian government to return to economic system in accordance with the constitution.

The study of the economic constitution is important at this time, because so far Indonesia has not made the constitution a reference for the national economy. Constitutional economy is an economic system based on the provisions regulated by the constitution of a country.

Branch Economics it was primarily developed by James Buchanan, winner of the 1986 Nobel Prize in Economics. Buchanan studied the constraints that constitutions pose on the economic sector. Standard economics does not study other constraints, such as those related to self-control.
Indonesian Economic System in the 1945 Constitution
Indonesian Economic System in the 1945 Constitution

  • Indonesian Economy In Accordance With the 1945 Constitution

The Indonesian constitution has regulated since the question of control and ownership of natural resource wealth, individual property rights, to the role of the state and in business activities. The economic system is not only based on Article 33 of the 1945 Constitution, both the original and after the amendment, as a paradigm of economic management as understood by many people, but also in several other articles in the 1945 Constitution which regulates the paradigm of the State’s social obligations to the community.

Based on the 1945 Constitution of the Republic of Indonesia Article 33 after the amendment, that:

  1. The economy is structured as a joint effort based on the principle of kinship.
  2. Production branches which are important to the state and which affect the livelihood of the people are controlled by the state.
  3. The earth and water and the natural resources contained therein are controlled by the state and used for the greatest prosperity of the people.
  4. The national economy is organized based on economic democracy with the principles of togetherness, efficiency, justice, sustainability, environmental insight, independence, and by maintaining a balance of progress and national economic unity.
  5. Further provisions regarding the implementation of this article are regulated in law.

Article 33 of the 1945 Constitution emphasizes economic politics to achieve people’s prosperity. What is meant by prosperity is nothing but the ability to fulfill material needs or basic needs. The measure to prove the success or failure of the politics of prosperity and the politics of the economy is the mandate of the 1945 Constitution, namely to increase the prosperity of the people as much as possible, not the prosperity of individuals. Because if individual prosperity is prioritized, then the reins of production will fall into the hands of powerful individuals. If this happens, the large number of people will be oppressed.

The economy must be based economic democracy, namely prosperity for all. Earth and water and natural resources are the foundations of people’s prosperity. So it must be controlled by the state for the greatest prosperity of the people. Bung Hatta described the measure of the achievement of people’s prosperity as follows:

The country is not yet prosperous and has not implemented social justice, if the poor are still wandering in the middle of the road, and the children who are expected to be the pillars of society in the future are neglected.

Article 23 of the 1945 Constitution regulates the amendments to the APBN which regulates its use for the greatest prosperity of the people. It is clearly stated that the state budget is for the welfare of the people. Therefore, the obligation to guarantee basic needs, provide a decent living through employment, and so on should be reflected in the APBN allocation. Until now, the state budget has not allocated a budget to fulfill these obligations. The state’s obligation to create jobs, for example, has been handed over to the private sector with the state’s obligation to create a good business climate

Article 27 of the 1945 Constitution which guarantees the right to work and a decent living for every Indonesian citizen. There are many ways to create jobs. Indonesia is one of the largest producers of some of the world’s agricultural and mining commodities. But the government took policies that did not benefit the people. For example, Indonesia is the world’s largest producer of wood and rattan, which is produced from Eastern Indonesia. However, the government did not adopt a policy on wood and rattan-based processing industries, which could create jobs and provide a more decent life for the community. This will also reduce the development gap between the regions of Eastern Indonesia and Western Indonesia.

Article (28) states that the people have the right to fulfill their basic rights by the state. Article (31) explains that the state is responsible for the right of every citizen to get education and the government guarantees the education budget is at least 20% of the APBN and APBD. Article (34) also emphasizes that the poor and neglected children have the right to obtain the fulfillment of basic needs from the state.

Article (23) emphasizes that in order to carry out these obligations, budget and financial management must be prioritized for the welfare of the people. Seeing the meaning of these articles in our constitution, it becomes clearer to us why the founder of this republic emphasized that the state must control various strategic natural resources as stated in article 33 of the 1945 Constitution. This is because the socio-economic task of the state towards the people is very important. heavy so that it will rely on natural resources as a source of financing.

  • The Road to a Constitutional Economy

Prior to the amendment of the 1945 Constitution, the law could not be tested, because there were no institutions and mechanisms to examine the constitutionality of the law. As a result, the law cannot be contested unless the law-making institution, namely the House of Representatives, changes it. In the fourth amendment of the 1945 Constitution Article 24 paragraph 2, judicial power is exercised by a Supreme Court and judicial bodies under it in the general court environment, religious court environment, military court environment and a Constitutional Court. Article 26 c of the 1945 Constitution amendments to paragraph 1. The Constitutional Court has the authority to judge at the first and final levels whose decisions are final in order to examine laws against the 1945 Constitution.

Now all laws related to economic policy if they are not in accordance with the constitution can be filed for cancellation through the Constitutional Court. The Law on Electricity and several articles of the Oil and Gas Law were once canceled by the Constitutional Court, because they were deemed to be contrary to the 1945 Constitution, especially article 33. Now policy makers in the economic sector must pay attention to constitutional signs. The public must also pay attention to government policies related to the economy and welfare and submit them to the Constitutional Court if they are deemed to be contrary to the 1945 Constitution, so that the country’s economy is managed according to the constitution.

  • Economic Democracy Act

Economic democracy is a concept initiated by the founders of the Indonesian state. They have initiated the concept of economic democracy to find a form of economy that is appropriate and in accordance with the character of the Indonesian nation. According to Sritua Arief, economic democracy has moral consequences, but is particularly highlighted as a form of blending political, economic, and cultural morals. Political, economic, and cultural moral systems work dynamically, in balance, and do not subordinate each other so that each interacts well.

In Article 33 of the 1945 Constitution of the Republic of Indonesia, it is clear that the Indonesian economic system is organized based on economic democracy. In order to realize the economic democracy, the DPR RI once discussed the Draft Law on Economic Democracy. This bill by the people’s representatives is intended to organize the National Economy as a joint effort by prioritizing the interests of the people for the greatest prosperity of the people. The people’s representatives in charge of this issue have traveled to various countries and campuses in various regions, but until now the voices of the honorable council members who talk about economic democracy as mandated by our constitution have not been heard.

  • Constitutional Economics Towards Economic Democracy

Economic democracy which will be formulated through the Economic Democracy Bill should not deviate from several articles in our constitution which have regulated the system of economic management and the state’s social obligations to the community. The momentum of the economic crisis that we have experienced and people’s complaints about the difficulty of the current burden of life with the difficulty of getting a job due to limited employment opportunities and in order to welcome the 65th independence of the Republic of Indonesia, we should all voice the importance of the Indonesian state to return to the constitutional economy. The economy is increasingly deviating from the goal of forming the Republic of Indonesia, one of which occurs because the economy is not carried out according to the constitutional economic path. So, there is no other choice but to make corrections to the direction of economic policy and return to the 1945 Constitution as the main reference.

Thus, the constitution is the basis for living together in one large, multi-ethnic, multi-cultural, multi-religious, multi-religious society. The constitution guarantees the independence of each individual, but there are limits so as not to reduce the freedom of others. This issue is widely discussed in the discipline of constitutional politics. The independence of polluting production must disturb other people, so it is necessary to limit it through regulations or laws.

The Constitutional Court (MK) annulled the Electricity Law and several articles of the Oil and Gas Law, because they were considered contrary to the 1945 Constitution, especially article 33. In addition, it was stated that in many laws, article 33 was only interpreted with the concept of a market economy. By listening to the Constitutional Court’s argument as reported by the capital’s newspaper in mid-December 2004, it can be concluded that several economic meanings in the Constitution need to be discussed further:

  1. Economic articles in the Constitution,
  2. market economy and the constitution,
  3. The meaning and interpretation of the words “state dominates

Legal basis :

  • [1945Constitution

Reference :

  1. Putong.Iskandar, Introduction to Micro and Macroeconomics:Ghalia Indonesia, 2003
  2. http://myilmu Lintas Ekonomi.html
  3. Case, Karl E. and Ray C. Fair, Principles of Economics, 4th ed. New Jersey: Prentice-Hall, 1996
  4. http://myilmu Lintas
  5. Chiang, Alpha C., Fundamental Methods of Mathematical Economics, 3rd ed. Manila: McGraw-Hill, 1984